PETALING JAYA: Hard disk drive (HDD) maker JCY International Bhd plans to employ horizontal expansion and diversification as part of its long-term business sustainability strategy to navigate the challenges of the Covid-19 pandemic.
In its latest annual report, the company said it would continue to be competitive in the HDD space, adding that it is also exploring the possibilities of utilising its core competencies and capabilities in other related and new fields.
“The group adopts two strategies for the long-term sustainability of our business. The first will be horizontal expansion in the digital storage industry by increasing our market share within the supply chain and expanding our range of products to more customers within the digital storage industry.
“This horizontal expansion plan includes entering into the supply chain for the solid state drive industry.”
The company added that it also planned to diversify into other related and new industries, such as automotive and the aerospace sectors.
“In 2020, the group had engaged in new business opportunities in the automotive industry in Malaysia and had commenced new businesses in the aerospace industry in China.”
JCY said the Covid-19 pandemic had brought many challenges and uncertainties to the HDD business segment.
“The HDD unit shipments in 2020 were lower than originally forecast due partly to disruptions in the HDD components supply chain amid the Covid-19 pandemic.
“The decline in demand for HDD units in 2021 is projected to be softened with similar shipment units as 2020.”
In its financial year ended Sept 30, JCY recorded revenue of RM1.08bil, representing an increase of 4% compared with the revenue it recorded in the previous corresponding period.
“This increase in revenue was due mainly to better product sales mixes, ” said JCY.
Year-on-year, the group shipped 3% fewer units of products to its customers last year.
“The reduction was due mainly to lower shipments in the months of March and April 2020 as a result of the movement control order imposed by the Malaysian government amid the Covid-19 pandemic.”
JCY said it recorded a gross profit of RM41.84mil in 2020, compared with a gross loss of RM29.52mil in 2019.
“In 2019, as part of the efforts to level our operation capacity to market demands, the group ceased operations in some of the rented factories located in Johor Baru, as well as a factory located on a leasehold land in Suzhou, China.
“Though the planned consolidation did not materially impact our capabilities in meeting our customers’ demands, the cessation led to a temporary higher operational cost per production unit in 2019. The plants consolidation carried out in 2019 has yielded better cost efficiencies in 2020.”
JCY said the Covid-19 pandemic has been one of the biggest challenges to the group’s operations in 2020.
“The resulting measures of the lockdowns, as well as the encouragement of working and studying from home was implemented in many countries across the world. This has changed the way businesses operate and people collaborate, work and study.”